Tezos [XTZ] gains institutional attention as Coinbase Custody announces staking support

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Coinbase, one of the leading cryptocurrency exchanges around the globe, is in the spotlight yet again. Sam McIngvale, the Product Lead at Coinbase Custody, announced that they would be adding institutional support for Tezos [XTZ], the nineteenth-largest cryptocurrency by market cap.

The exchange platform will be launching offline staking support for the cryptocurrency on Coinbase Custody. Coinbase also announced that they would be adding governance support for the Maker [MKR] protocol.

The blog post read:

“Today, we’re announcing Tezos (XTZ) baking for Coinbase Custody clients. We’re proud to be the first full-service, regulated, comprehensively-insured, and 100% offline staking provider in crypto.”

This was facilitated by Tezos using the Delegated Proof-of-Stake [DPoS] mechanism and supporting the Turing complete smart contract. Proof-of-Stake assets, in general, allow users to participate in securing the blockchain by staking or delegating their coins to a validator who runs a node, thereby enabling coin holders to earn a share of the reward received by a validator for mining blocks.

Source: Crypto Insider

The exchange stated:

“Most Coinbase Custody clients are fund managers who act as fiduciaries to their investors. Participating in POS networks has raised an interesting tension for them: to stake or not to stake? Staking avoids deflation, but products to date increased risk.”

This was followed by the exchange stating that “prior to today”, the risk involved in staking was more than the return, resulting in several investors opting out of the system. However, they claimed that “Coinbase Custody changed this calculus” as the platform’s track record in terms of security and regulatory compliance, and insurance coverage was second to none.

Source: Coinbase

Source: Coinbase

Kathleen Breitman, the co-founder of Tezos, stated:

“The launch of Tezos staking through Coinbase Custody serves an acute need that existed up until now: a way for institutional participants who rely on a secure, offline custodian to take an active role in the network […]”

Furthermore, the exchange remarked that it chose Tezos for offering staking support because of its “DPOS architecture coupled with high demand from current clients”. In terms of protecting delegated funds, the exchange asserted that Tezos’ design was “thoughtful” since the beginning.

The blog post said:

“The result is that we can keep client assets in segregated cold storage, where they’re never subject to more risk than non-DPOS assets (e.g., BTC). Coinbase Custody’s customers’ staked assets are always protected by insurance policies underwritten by some of the largest insurance providers in the world.”

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Priya is a full-time member of the reporting team at AMBCrypto. She is a finance major with one year of writing experience. She has not held any value in Bitcoin or other currencies.

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